Azerbaijan is a major hydrocarbon exporter and must succeed in diversifying its economy. This shift will involve development of transport, the private sector, clean energy, and sustainable tourism, among others. AFD is providing support to the country in these four priority fields.
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Oil, Azerbaijan

Strengthening AFD's action in the South Caucasus


Supporting good governance

Armenia’s economy enjoyed double-digit growth potential in the 2000s. But since its collapse in 2009 (-14.2% of GDP), the country has not been able to re-establish this growth rate, which has remained below 3.5% since that time.

To reverse this situation, the Armenian government has undertaken a big reform plan to tackle the country’s structural weaknesses. This plan is based on four pillars: job creation, development of human capital, strengthening of social protection, and modernization of the public sector.

Multisector budget aid of 40 million euros was granted in 2016 in order to provide guidance—with the World Bank—in major fiscal, economic, social and environmental reforms. Its objective is to support large-scale projects to modernize Armenia’s public services offer and reform the way the administration functions. It will also contribute to the country’s medium-term efforts towards sustainable financing of social programs, the sustainability of economic programs, tax fairness, and efficient management of public resources.

Modernizing transport



Renovating transport is a priority for Azerbaijan. The country's challenge is to benefit from its position at the crossroads between Europe and Asia and to ensure balanced development of its lands.

Moreover, its 2,000 km of railways and rolling stock are direct heritage from the Soviet era. Their dilapidated condition has consequences on the safety of the personnel and passengers, as well as on energy performance and the sector's competitiveness....

It is against this backdrop that the authorities have developed an ambitious program to modernize the Azerbaijani section of the Azerbaijan-Georgia-Turkey railway line. Financing the latter is the goal of the first agreement signed between AFD and the Azerbaijani Government. This support takes the form of a guaranteed loan by the Government of 112.5 million euros, granted to Azerbaijani Railways (ADY).

Signed on 14 March 2017, this financing will be used to:

  • build two maintenance workshops for the future locomotives that will run on the East-West Railway section,
  • install new equipment and maintenance infrastructures,
  • train machinists and drivers of the new locomotives,
  • provide long-term guidance for the national railway company through technical assistance services.
regional office based in Tbilisi
million euros committed since 2012

Azerbaijan is the biggest and most populated of the three South Caucasus countries. Thanks to its hydrocarbons, the country experienced strong growth during the 2000s. Poverty and inequality decreased, but significant regional gaps remain, all the more so because the fall in hydrocarbon prices is penalizing the country economically.

AFD has been providing support to Azerbaijan since 2012, within the framework of a "green and inclusive growth" mandate. AFD's intervention includes loans to the Government as well as to enterprises and local authorities. It additionally mobilizes European grants as part of the Neighbourhood Investment Facility - East.

Currently, AFD's objective is to help Azerbaijan prepare for the post-petroleum era, and thus to diversify its economy. Modernization of its transport is just a first step.


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